First comes…..next comes…..then comes……for the developing trader

One trader with, with whom we are working, is coming along nicely. Firm is happy with his progress. Our sense is he has a real chance to become good.

Our job is to help him set priorities. Is that to make money? Or is that something else?

In a recent review trader honestly wrote:

There are two issues with this that really grind my gears..

1.) the issue of missing the trade in the first place. This alone usually drives me crazy and often times leads to tilt and bad trading. Missing a trade for me can happen for a number of reasons (not focusign on it, forget to set alerts, bad mindset, ect…) in this particular example, the trade I missed today was XNET. This was one of my main watches today as it has been very parabolic on the daily chart. Chinese cloud computing company up on no news. It faield hard on the open and offered a great opportunity when it retraced to VWAP and went sideways. For me, this was a high conviction trade that I need to be FULL SIZE in. I did take the trade, but I was way too small in this. Short from 11 and it came off all the way to 8.25. I did take the trade, but the lack of size was even more frustrating because it was such a great swetup. I essentially missed this trade because i was not big enough and in my eyes, a blown opportunity.

2.) lack of size in good trade + oversize in lesser trade – Because I lacked the size in my best idea, I went chasing size in lesser ideas. This led to a grind type of a day where I would go down in one trade and simply just try to make it back in the next. Essentially trading P/L. I knew in the back of my head that I should have traded that much larger. That lack of size in my higher conviction idea led to a subpar mindset.

This is an opportunity to pull a trader aside and get his priorities straight.

I like the idea of trader working on sizing.

I like the expectations trader has about performance.

What needs focus is what we are trying to accomplish at this stage of his career. And massive PnL is not that.

A first step at our firm is to find the setups that are worth study. What trades make the most sense to you? Build your PlayBook of trades that will be your trading business.

Next is to become consistent trading these setups.

Notice that massive PnL and trading huge size are not first nor second goals. That comes after building your PlayBook and then consistency.

My observation working with traders is that skipping to sizing and massive PnL interrupts the natural sequence of trader development. And that if you get the sequence wrong that just might mess up everything for a developing trader.